KOLKATA: The battle for control of the ill-fated Haldia Petrochemicals Ltd (HPL) seems to have begun all over again. Indications are that the brief honeymoon between Purnendu Chatterjee of The Chatterjee Group (TCG) and Mamata Banerjee's government is over for good, and that their relationship will now be progressively acrimonious.

On Tuesday, state industry minister Partha Chatterjee got majority votes in the HPL's crucial board meeting - the first time in company's 18-year-old history when a cabinet minister of the West Bengal government has become chairman of HPL. To financial institutions, lenders' consortia and India Inc at large, this might convey a very stable message, especially in the context of the decades-long instability that HPL has been going through.

"I have been elected as the chairman of the company," beamed the industry minister immediately after the end of the meeting. Later, he told ET: "I got nine votes, including that of all the financial institutions. Even the HPL managing director voted for me. The TCG group nominees voted for themselves, so I was a clear winner."

For Purnendu Chatterjee, this might well be his death rattle. Apparently, he suspected something in the offing as had quietly moved the International Court of Arbitration (ICC) in Paris on March 20, about the HPL shareholding issue, and over he being denied the total control of the company.

Mamata's response was swift and vicious. Left leaders like Buddhadeb Bhattacharjee and Nirupam Sen had spent months arguing with Purnendu, and fighting him in courts of law. Mamata simply removed him from the chairmanship of HPL within seven days of coming to the office of chief minister and at the first opportunity, with almost the same brutality that she had ousted the Left from Writers' Buildings.

Indicating just how hard the government has taken this, the industry minister told ET: "He can go wherever he likes and do whatever he likes. I will, under no circumstances, hand him the 155 crore shares of the West Bengal government, which Purnendu wants."

The 155 crore shares currently form part of the West Bengal government holding of 48.29% and are 5.09 % of the paid up capital. According to the 2004 agreement between TCG and West Bengal government, it was understood that the state would give over this chunk against Rs 500 crore that TCG was supposed to bring, which eventually they couldn't. The dispute remains ever since. TCG and its associate companies hold 35.22% shares of HPL as of now. Tatas hold 2.3%, IOC 7.66% and lenders 6.53% of HPL equity.

Is this therefore the end of the road for him or is there still hope? "There is always a hope," Purnendu told ET, although he remained almost incommunicado after the board meeting.

Having made the point that she is the boss in her state, Mamata used the HPL chair instantly to send the message across all constituents that the government was stepping in, actually bodes well for the company. Riddled with operational problems, HPL would have had to report to the BIFR in 2011-12, because the company's net worth would have eroded by 50% at the end of the financial year. HPL's net worth stood at Rs 2,844 crore on March 31, 2011, while this year it would have been Rs 1,422 crore.

Mamata used her influence and through Partha Chatterjee convinced lenders to convert Rs 128 crore of the total Rs 1,000-crore debt into equity at the board meeting. "This huge step actually saved us from reporting to BIFR," gushed Partha S Bhattacharyya, managing director, HPL.

Bhattacharyya also said that spreads were low because the petrochemical market was down. "The plant suffered 58-day shutdown resulting in a loss of Rs 200 crore. We will now carry on a technical audit and performance guarantee test." He did not expect any profits in the first half of 2012-13, but if the petrochem sector goes for an upswing from around October 2012, the company's performance will improve, he said.

Bhattacharyya said that the board has approved 200 crore butane-I project. "We have asked the lenders for an extra term loan, and it is likely that the state government will take preference shares in the project," he said indicating that the loan component could be around 80 crore, while preference will be Rs 120 crore.

HPL has been suffering losses since 2008-09. The company's reserves had been taking hits every year due to losses. The reserves, which were Rs 10,131 crore in 2007-08, have now turned negative. The net worth had consequently got mauled. It had gone down to Rs 2,097 crore in the first nine months of 2011-12 till December 31, 2011 and March 31, 2012, it would have been Rs 1,422 crore. The Rs 128-crore debt to equity conversion helped in staving the BIFR off, at least for the time being.

"Due to this restructuring of debt, courtesy the lenders, it has been possible for HPL to avert an immediate crisis. There are no problems now, at least for sometime. I will visit HPL along with chief minister Mamata Banerjee soon, to give a boost to the morale of the employees," Partha Chatterjee said.